Q & A

“Being Recalled Does Not Prohibit Future Service On Board,” News-Press

Q: A group of owners in my condominium association are considering recalling certain members of our board of directors. However, a question has arisen as to how long a recalled person is barred from serving on the Board. (B.K., via e-mail)

A:  Section 718.112(2)(j) of the Florida Condominium Act states that the unit owners are entitled to recall any or all members of the board of directors, with or without cause. The Florida Condominium Act and supporting administrative rules adopted by the Division of Condominium, Timeshares, and Mobile Homes lay out the process for recalling directors. A majority of the entire voting interests must vote in favor of the recall in order for it to be effective. For example, if your condominium had one hundred (100) units, you would need fifty-one (51) votes for the recall.

In the event that less than a majority of the board of directors is recalled, the remaining directors, by a majority vote, are entitled to fill the vacancies created by the recall. In the event the owners are recalling a majority or more of the board, the statute and rules require that the owners also nominate replacement directors and an election be held as part of the recall procedure.

In cases where the board fills the vacancy, the vacancy cannot be filled by the person recalled. However, being recalled does not prohibit future service on the board. For example, a director recalled today could put their name into nomination and be put on the ballot for the next annual meeting where director seats are up for election.

Q: Can a condominium association restrict the number of units a person or corporation can own? The concerns are financial, more rental units, and voting control. (C.K., via e-mail)

A: Establishing a limit on the total number of units that any one individual or corporate entity can own, may (or may not) discourage potential commercial investors from seeking to purchase a large number of units in a community. This could offer some protection against skewed voting control, encourage a stable resident population, and, perhaps, protect property values.

However, such a restriction may be considered to be a “restraint on alienation,” which is a legal term for covenants and agreements which restrict the free transferability of property. Courts will allow such a restraint, provided that it is reasonable. In 1983, the Massachusetts Supreme Court found such a restriction to be reasonable in the condominium context. The Court in Franklin v. Spadafora, 388 Mass. 764 (1983) held that the restriction was a reasonable means imparting continuity of residence, inhibiting transiency, and safeguarding the value of investment.

A Florida appellate court also recently addressed this issue in The Tropicana Condominium Ass’n, Inc., v. Tropical Condominium. LLC, No. 3D15-2583 (Fla. Dist. Ct. App. Nov. 16, 2016).  The Court upheld the amendment and applied a “reasonableness” standard to the amendment. Specifically, the Court noted that one owner had acquired six units, and allowed all of them to go into foreclosure. The Court further stated that given the relatively small size of the condominium (having only 48 units), multiple foreclosures caused by a single owner’s financial circumstances, could have a significant, detrimental financial impact on the condominium association.  You will also note that the Court analyzed the application of the provision to the ability of a mortgagee to foreclose, and, thus, presumably the availability of mortgage lending as facture in analyzing the reasonableness of the restraint.

So it would appear that such amendments will be upheld if reasonable if the context of the community, which would presumably include the stated reasons for the restriction. It would be necessary to have a Florida licensed attorney prepare such an amendment and this work should also include review of the association’s particular circumstances.

“Flags Governed By Statute,” News-Press

Q: An issue has arisen in my homeowners’ association concerning what flags are permitted to be flown by homeowners. Certain owners have begun flying historic versions of the American flag stating that they are allowed to do so under the law. Can you give some guidance on this issue? (M.H., via e-mail)

A: Section 720.304(2)(a) of the Florida Homeowners’ Association Act, provides that “[a]ny homeowner may display one portable, removable United States flag or official flag of the State of Florida in a respectful manner, and one portable, removable official flag, in a respectful manner, not larger than 41/2 feet by 6 feet, which represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW-MIA flag, regardless of any covenants, restrictions, bylaws, rules, or requirements of the association.”

Further, the Act goes on to state that any homeowner is also entitled to erect a freestanding flagpole no more than twenty (20) feet in height on any portion of their property regardless of what the governing documents provide. Such flagpole may not obstruct sightlines at intersections and not be erected in an easement. The homeowner may display the same flags from the flagpole as were permitted to be displayed by the portable flag provision. There is no statutory right to display any other flags, including historic versions of the United States flag.

Accordingly, if an owner wanted to display a historic version of the United States flag, there is no right to do so under the Act, however the Act does not prohibit such display either. Ultimately it would be necessary to review the relevant provisions of the governing documents to determine if there is a regulation on displaying flags. If there is a prohibition on displaying flags, other than those flags permitted by the Act, such a prohibition would be enforceable. However, if the governing documents do not otherwise regulate the display of flags, arguably the homeowner could display any flag they wish, including historic versions of the United States flag.

The Florida Condominium Act, Chapter 718, also provides the right of unit owners to display a portable United States flags or the official flag of the State of Florida, the flags of the Armed Services, or the POW-MIA flag, regardless of the Governing Documents.

Q: My condominium association had the annual meeting in March 2019, and no board meetings since then. What’s the Florida statute in reference to having board meetings? Is the association required to have a certain amount of meetings a year? Can they legally go 4 months without a board meeting? (T.P. via e-mail)

A: A condominium association is not required to have a certain number of meetings of the board of directors per year under Florida law, unless the condominium documents (the declaration of condominium, bylaws, articles of incorporation, or rules) so provide.

Every condominium association must hold an annual meeting of the members and a budget meeting. However, there is no requirement in the statute for regular meetings of the board of directors. Even if there is not a requirement for board meeting frequency in the condominium documents, if 20% of the voting interests in a condominium association petition the board of directors to address an item of business, the board of directors, within sixty (60) days after receipt of the petition, must place the item on the agenda at its next regular board meeting or at a special meeting called for that purpose.

This article originally appeared in News-Press

“Transfer Approval Fees Restricted By Law,” News-Press

 

Q:  My condominium association states that under Florida Statute 718.112 they can charge a fee when someone is buying a condominium of $100.00 per applicant. They call it a transfer fee, yet in reading the statute one cannot charge husband/wife and parent/dependent child as two separate people. They said that they have every right to charge each person under the law $100.00 and considered it a background check. I understand the need for background checks. However, I question the legality of charging each person $100.00? (B.C., via e-mail)

A:  A condominium association can order a background check for each of the proposed unit occupants, if the declaration of condominium authorizes pre-sale investigation of potential new owners.

Section 718.112(2)(i) of the Florida Condominium Act authorizes a condominium association or its agent to charge a fee of up to $100.00 per applicant in connection with its approval of a sale, mortgage, lease, sublease, or other transfer of a unit, if the condominium documents require the condominium association to approve such transfer and the transfer fee is specified in the condominium documents. As you note, this section of the Florida Condominium Act further provides that married couples, as well as a parent and dependent child, are to be treated as one applicant and pay a single transfer fee. Further, if the transfer being considered by the condominium association is a renewal of a lease or sublease with the same lessee or sublessee, the transfer fee cannot be charged.

Although it does not apply in the context of your association, the Florida Homeowners’ Association Act does not prohibit (or for that matter permit), nor limit transfer fees. Accordingly, the prevailing view is that a homeowners’ associations may charge a reasonable transfer fee if authorized by the governing documents.

The $100.00 transfer fee is intended to reimburse the association for outside expenses incurred (such as the background or credit checks) and otherwise cover the association’s administrative costs. No extra fees may be passed on to an owner or prospective owner (or prospective tenant) by either the association or its agents (such as management companies). Alleged violations of this statute have generated class action litigation in other parts of the State.

I would note that the $100.00 cap in the statute is over 40 years old, and times have certainly changed as has the cost of doing business. I am aware of pending efforts by certain groups to seek a change to the statute authorizing a higher transfer fee, which would seem to make sense.

Q:  Can a condominium renter see the current financials? (R.C., via e-mail)

A:  A renter is only entitled by law in his or her own right to inspect the declaration, articles of incorporation, bylaws, and rules and regulations.

A renter could only inspect the financials and other official records in the same manner as an association member if the renter is authorized by an association member to act as the owner’s authorized representative.

Q: I am a seasonal resident. I sent a letter to the manager of my condominium association requesting that certain records be e-mailed to me. In response, the manager advised that I would have to come into the office to look at the records. Since I am out of town, don’t they have to send the documents to me by either mail or e-mail? (J.B., via e-mail)

A: No. The Florida Condominium Act requires the association requirement to keep records and make those records available for inspection and copying by unit owners. If records are available electronically, the association may, but is not required to, provide the records electronically.

Pursuant to the terms of the statute and interpretations by the applicable state regulatory agency, there is no obligation to send records to owners by mail, e-mail, or otherwise.

Leftover Funds Must Be Returned or Credited

Q: Our association levied a special assessment after Hurricane Irma for cleaning up our property and repairing some minor damage to the buildings. The damages were not bad enough to reach our insurance deductible. The board ended up spending quite a bit less than they assessed for, and decided to put the left over money in our reserves. Is this legal? I thought the board had to return the money to us? (J.S., via e-mail)

No Cooling Off Period Required After Failed Amendment

Q: My condominium association recently voted on proposed amendments to our documents. The amendments did not pass and now the board is stating they plan on scheduling a new vote on the amendments again. Can they do this? Doesn’t the Association have to wait some period of time before there is a new vote on failed amendments? (N.G., via e-mail)

Owners Can Record Meetings; Free Speech Rights Unclear

Q: I recently agreed to serve on the board of my condominium association. There is one owner who comes to many of the board meetings and sits in the front row with his phone device pointed at the head table. I assume he is recording the meetings, which I understand he has the right to do. My question is whether there are any limits on what this person can do with his recordings. For example, can he take photographs of me or other board members and post them on social media type sites? (J.L; via e-mail)

Audit Requirements Depend On Revenue

Q: I recently asked to inspect the financial records of my homeowners’ association. As part of that inspection I discovered that the association has not had an audit for at least the last seven years. When questioned, the treasurer stated that the association does not have to perform audits. Doesn’t every association have to have an annual audit? (A.G., via e-mail)

Lee County Wants To Speed Up Hurricane Cleanup

Q: Lee County has information for homeowners’ association leaders. Professional property managers and residential community associations can now take steps to protect their communities in the event of a hurricane or other declared major disaster in Lee County. FEMA regulations require that private or gated communities have a current Right of Entry and Indemnification form on file with Lee County before any disaster debris recovery crews are allowed to entry into the community. The Right of Entry would only be used as necessary during the recovery period following a declared state of local emergency. Lee County now offers a simplified process to submit the paperwork. The form is located at: http://leegis.leegov.com/ROE. This form needs to be filled out only once a year. Lee County Solid Waste encourages communities located in unincorporated Lee County, Bonita Springs (unincorporated areas of Bonita outside city limits only), and the Village of Estero to complete this process. (Betsy Clayton, Lee County Director of Communications)

HOA Board Meetings Must Be Open

Q: My homeowners’ association is currently under developer control. Does a developer-controlled homeowners’ association have to hold open and noticed board meetings? (B.P., via e-mail)

A: Yes. Section 720.303(2) of the Florida Homeowners’ Association Act contains the legal requirements for board meetings. The statue requires that notice of all regular board meetings be posted in the community at least 48 hours in advance of the meeting. Additionally, members have the right to attend all board meetings, and speak to all designated agenda items. There is no exception to these requirements for developer-controlled associations.

Additionally, any committee or similar body that has the authority to make final decisions regarding the expenditure of association funds or any body vested with the power to approve or disapprove architectural decisions with respect to specific parcels of residential property must also hold open and noticed meetings.

There are two exceptions to the requirement that meetings be open to owners. The first exception is when the board is meeting to discuss personnel matters. The second exception involves meetings with the association’s attorney with respect to proposed or pending litigation. These meetings may be closed to the members.

Agency Revisits Term Limit Issue

In 2017, the Florida Legislature passed a law which stated that condominium directors could not serve more than 4 consecutive 2-year terms, essentially creating an 8-year term limit. The obvious immediate question was whether this law would be applied retroactively (reach back to prior years of service to determine if a director was “termed out”) or whether the law would only be applied prospectively (meaning that you would not count previous terms in calculating the 8 year term limit). The law itself did not say one way or the other whether it was intended to be retroactive.